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Bondholders of Balm Co. converted their bonds into 90,000 shares of $5 par value common stock....

Bondholders of Balm Co. converted their bonds into 90,000 shares of $5 par value common stock. In Balm's accounting records, the bonds had a face value of $775,000 and unamortized discount of $23,000 at the time of conversion. What amount of additional paid-in capital from the conversion should Balm record?

Select one:

a. $325,000

b. $348,000

c. $302,000

d. $798,000

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Answer #1

c. $302,000

Face value of bonds 775000
Converted valueof bonds(90000*5) 450000
325000
But there is already an amortized discount of $23000
So the additional paid in capital = 325000 - 23000
= $302000
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